Global economics Flashcards
(8 cards)
1
Q
Gains from free trade
A
- lower prices
- greater choice
- more competition
- difference in resources
- economies of scale
- more efficiency in allocation of world resources
2
Q
Arguments in favour of protectionism
A
- protection of domestic employment (sunset industries)
- protection against low cost immigrant labour
- protection of sunrise industries
- prevention of dumping
- protection of product quality
- protection against overspecialization
- strategic reasons
- increase government revenue
- correct balance of payments deficit
3
Q
Arguments against protectionism
A
- less choice
- higher prices
- less competition
- inefficient allocation or world’s resources
- hinder economic growth
- trade wars
4
Q
Economic integration stages
A
- preferential trading areas
- free trade areas
- Customs union
- Common markets
- Economic and monetary union
5
Q
Advantages of common trading bloc
A
- big market large exports
- more competition
- stimulation of investment
- political stability
- free movement of labour
6
Q
Disadvantages of common trading bloc
A
- discriminatory against non members
- lose economic and political sovereignty
7
Q
Factors influencing the value of a currency in a floating exchange rate system.
A
an explanation of how the value of a floating exchange rate is determined, including demand for exports and imports, speculation, relative interest rates, remittances, portfolio flows, relative inflation rates, foreign direct investment.
8
Q
poverty trap
A
any linked combination of barriers to growth and development that forms a circle
